Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made as of the
2nd day of August, 2007 (the "Effective Date") by and between
INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation
located at 7100 Grade Lane, Building #1, Louisville, Kentucky 40213
(the "Company") and BRIAN DONAGHY, an individual residing at
18811 Weatherford Circle, Louisville, Kentucky 40245 ("the
"Executive").
RECITALS
The Company desires to employ the Executive, and the Executive
desires to be employed by the Company upon the terms and conditions
set forth in this Agreement.
NOW THEREFORE, in consideration of (a) the Executive's
employment with the Company as its President and Chief Operating
Officer, (b) the compensation paid to the Executive and the
benefits provided to the Executive in connection with such
employment, (c) the Executive's use of the equipment, supplies,
facilities and other resources of the Company and (d) the
opportunity provided to Executive by the Company to acquire or use
information relating to or based upon the Company's business and to
work and develop in the industry and lines of business engaged in
by the Company from time-to-time or for which the Executive is
hereby employed hereunder, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
Article 1.1 Defined
Terms . As used herein, capitalized terms when used in
this Agreement shall have the meanings set forth in Annex 1
attached hereto and made a part hereof and as defined in this
Agreement.
Article 1.2
Interpretation . The words "herein," "hereof,"
"hereunder" and other words of similar import refer to this
Agreement and not any particular section, paragraph, subparagraph
or clause contained in this Agreement. Wherever from the
context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and
pronouns stated in masculine, feminine or neuter gender shall
include the masculine, feminine and the neuter.
ARTICLE 2
TERM OF EMPLOYMENT
ARTICLE 2.1 Duration . The Company agrees to employ
the Executive, and the Executive agrees to be so employed for an
Initial Term ("Initial Term") commencing on the Effective Date of
this Agreement, and ending on the Termination Date (as defined
below) or December 31, 2011, whichever shall first occur. The
Executive's employment may be terminated earlier or renewed, as
herein provided, pursuant to this Article. At any time more
than ninety (90) days prior to the expiration of the Initial Term
or any Renewal term, respectively, either the Company or Executive
may give notice of nonrenewal and this Agreement shall terminate at
the end of such term. If a notice of nonrenewal is not given,
Executive's employment under the terms of this Agreement shall be
extended for an additional one year period. (The one year
period shall be defined as commencing on the fifth anniversary of
the Effective Date and continuing for the next three hundred and
sixty five (365) consecutive calendar days.)
ARTICLE 2.2 Termination . The
Executive's employment may be terminated on any one or more of the
following dates: (a) the date specified in a Notice of
Termination given by the Executive in connection with his voluntary
termination (which shall not be less than thirty (30) days from the
date such Notice of Termination is given, unless a shorter period
is subsequently requested by the Company after receipt of such
Notice of Termination); (b) the date specified in a Notice of
Termination given by the Board of Directors of the Company to the
Executive stating that the Executive's employment is being
Terminated for Cause; (c) the date specified in a Notice of
Termination given by the Board of Directors to the Executive
stating that the Executive's employment with the Company is
terminated without cause; (d) the date of the Executive's death; or
(e) the date specified in a Notice of Termination given by the
Company at a time after which the Executive has become
Incapacitated in connection with a termination of the Executive's
employment by reason of his Incapacity. Except as provided in
Article 2.4, all obligations of the Company to Executive shall
terminate as of the Termination Date.
ARTICLE 2.3 Salary and Benefits. During the Employment
Period :
ARTICLE
2.3.1
The Company will pay the Executive a Base Salary at the rate of
$3,000 per week ("Base Salary"), payable in installments consistent
with the Company's normal payroll schedule, subject to applicable
withholding and other taxes and other required deductions for
welfare, fringe benefits and withholding and those deductions
requested by Executive. Effective the 1 st day of
January in 2009 and every subsequent year during the Initial Term,
the Base Salary shall be increased by the cost of living index
increase for the Metropolitan Louisville area. However, in no
event shall Executive's Base Salary be decreased as a result of a
decrease in said cost of living index.
ARTICLE
2.3.2
Upon execution of this Agreement, Executive shall receive a signing
bonus of twenty thousand (20,000) shares of the Company's common
stock, subject to all other terms and conditions of this
Agreement.
ARTICLE
2.3.3
The Executive will be entitled to participate in all medical and
hospitalization, group life insurance, retirement, and any and all
other welfare and fringe benefit plan as are from time to time
provided by the Company to its executive employees, subject to the
provisions of such plans, including, without limitation,
eligibility criteria and contribution requirements, as the same may
be in effect from time to time. The Company shall provide
Executive with a term life insurance policy with a death benefit
not to exceed $50,000.00, with the Executive to name his
beneficiary(ies).
ARTICLE
2.3.4
The Executive will be entitled to a maximum of three (3) weeks paid
vacation during each calendar year (prorated for any partial year
during the term) commencing in 2007 to be taken at such times and
intervals as shall be determined by the Executive, and approved by
the Chief Executive Officer of the Company, which approval shall
not be unreasonably withheld and provided that the timing of such
vacation shall not interfere with the Executive's performance of
his duties hereunder. Unused vacation shall not be accrued or
reimbursed to Executive.
ARTICLE
2.3.5
The Executive shall be entitled to reimbursement of reasonable
business expenses incurred by the Executive (subject to Executive's
submission of appropriate substantiation in accordance with the
rules in place for other executives of the Company). In
addition thereto, and not in substitution thereof, the Company
shall provide Executive with a monthly car payment allowance (the
amount of which shall not exceed $1,000.00 per month) which shall
be used by Executive to acquire an automobile selected by the
Executive, with the concurrence of the Company, for use by
the Executive during his employment by the Company. All
normal operating expenses incurred in connection with the operation
of the automobile shall be borne by the Executive. The
Executive shall, at his own expense, provide for comprehensive
insurance coverage for the vehicle, naming Company as a named
insured. Executive shall be responsible for any damage due to
neglect or misuse by Executive.
ARTICLE
2.3.6
During the Initial Term of this Agreement Executive shall be
entitled to receive twenty thousand (20,000) shares of the
Company's common stock, delivery by Company to the Executive no
later than April 1, following the close of Company's books for the
previous calendar year, provided that the following conditions have
been met: (i) the Executive has completed one (1) year of
employment; and, (ii) the Company's EBIDTA (as determined by
Generally Accepted Accounting Principles) exceeds four million five
hundred thousand dollars ($4,500,000.00) for the applicable
Measurement Period, which shall also take into account the effect
the issuance of said shares shall have upon the calculation of the
Company's EBIDTA. In no event whatsoever shall the
entitlement of the Executive to qualify for shares of the Company
under this Agreement provide for the Executive to receive more than
one hundred thousand (100,000) shares of the common stock of the
Company (including the shares received by Executive as his signing
bonus in Article 2.3.2), all of which shall be subject to the
anti-dilution provisions set forth in Article 2.3.7 below.
ARTICLE
2.3.7
The Company represents and the Executive acknowledges that he shall
be receiving "restricted" Shares subject to a one (1) year holding
period and further subject to the provisions of Rule 144 under the
Securities Act of 1933.
Executive agrees that this Agreement and the
rights, interests and benefits under it shall not be assigned,
transferred , pledged, or hypothecated in any way by Executive or
any other person claiming under Executive by virtue hereof.
Such rights, interest or benefits shall not be subject to
execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of the shares granted pursuant to this Agreement or of
such rights, interest, and benefits contrary to the preceding
provision, or the levy or any attachment or similar process
thereupon, shall be null and void and without any legal effect.
The Executive represents and warrants that he is receiving the
Shares for investment and not with a view to distribution thereof
and understands and acknowledges that in the absence of an
effective Registration Statement as to the Shares the Stock
Certificate(s) representing the Shares shall bear the following
legend:
The Shares represented by this certificate have not been registered
or qualified for sale under the Securities Act of 1933, as amended
(the "Act", or any state securities or blue sky laws, and may not
be sold, transferred or otherwise disposed of except pursuant to an
exemption from registration or qualification there under. The
Company may require, as a condition to the transfer of this
certificate, an opinion of counsel satisfactory to the Company to
the effect that such transfer will not be in violation of the Act
or any such laws.
The number of shares of Common Stock (the "Shares") shall be
proportionately increased in the event that the Company causes to
be issued additional Shares in the form of a stock dividend, stock
splits or other such reclassification; or conversely,
proportionately decreased in the event of a reverse split or
reclassification.
ARTICLE 2.4
Severance Pay .
ARTICLE
2.4.1
(a) If the Executive's employment ends as the result of a
Termination Without Cause, the Executive shall be entitled to
receive his Base Salary and Welfare Plan Benefits (as defined
below) through the Initial Term or Renewal Term, as
applicable. In addition, Executive is entitled to receive the
Company's common stock to which Executive would be otherwise
entitled under and upon satisfaction of the conditions set forth in
Article 2.3.6 throughout the Initial Term;
(b) If the Executive's employment ends as the result of
Executive's Incapacity, Executive shall be entitled to receive
either available worker's compensation benefits or insured benefits
as provided by the Company's disability policy. In addition,
Executive is entitled to receive the Company's common stock to
which Executive would be otherwise entitled under and upon
satisfaction of the conditions set forth in Article 2.3.6 for the
year in which Executive's employment terminates as the result of
Executive's Incapacity (and shall not be entitled to receive any
additional common stock for any years after the year in which
Executive's employment terminated as the result of Executive's
Incapacity);
(c) If the Executive's employment ends as the result of the
death of Executive, Executive shall be entitled to receive his Base
Salary and Welfare Plan Benefits through the date of death.
In addition, Executive (or his estate) is entitled to receive the
Company's common stock to which Executive would be otherwise
entitled under and upon satisfaction of the conditions set forth in
Article 2.3.6 for the year in which Executive's employment
terminates as the result of Executive's death (and shall not be
entitled to receive any additional common stock for any years after
the year in which Executive's employment terminated as the result
of Executive's death);
(d) If the Executive's employment ends as the result of
Voluntary Termination, Executive shall be entitled to receive his
Base Salary and Welfare Plan Benefits through the Termination
Date. In addition, Executive is entitled to receive the
Company's common stock to which Executive would be otherwise
entitled under and upon satisfaction of the conditions set forth in
Article 2.3.6 for the year in which Executive's employment
terminates as the result of Voluntary Termination (and shall not be
entitled to receive any additional common stock for any years after
the year in which Executive's employment terminated as the result
of Voluntary Termination); or
(e) If the Executive's employment ends as the result of
Termination for Cause, Executive shall be entitled to receive his
Base Salary and Welfare Plan Benefits through the Termination
Date. In addition, Executive is entitled to receive the
Company's common stock to which Executive would be otherwise
entitled under and upon satisfaction of the conditions set forth in
Article 2.3.6 for the year in which Executive's employment
terminates as the result of Termination for Cause (and shall not be
entitled to receive any additional common stock for any years after
the year in which Executive's employment terminated as the result
of Termination for Cause).
ARTICLE
2.4.2
In those instances where the Company owes Executive payments after
the Termination Date, the payments to be made by the Company to the
Executive under this Article 2.4 shall be made in installments, and
on the payment dates, during the Severance Period (as defined
below) on which Base Salary would have otherwise been paid had the
Executive's employment not been terminated. Upon the making
of the last of such payment, the Company will have no further
Severance Payment obligation to the Executive. All payment
shall be subject to applicable withholding and other taxes.
ARTICLE
2.4.3
For so long as the Company is required to make the severance
payments described in this Article 2.4 (the "Severance Period") and
subject to the provisions of Article 2.4.4 below, the Company will,
in addition to such payment, provide or arrange to provide the
Executive with benefits substantially similar to those which the
Executive was receiving or entitled to receive under the Company's
life, accident, dental and group health insurance plans, 401K, FSA
or any similar health or welfare plans in which the Executive was
participating immediately prior to the Termination Date ("Welfare
Plan Benefits") at a cost to the Company which is not greater than
the cost to him in effect immediately prior to the Termination
Date; provided, that to the extent any such coverage is prohibited,
whether by contract, any judicial or legislative authority or
otherwise, the Company shall in its sole discretion make
alternative arrangements to provide the Executive with Welfare Plan
Benefits or provide the Executive with a payment in an amount equal
to the cost to the Company of purchasing the Welfare Plan
